Staff Reports
Moore’s Law and Economic Growth
Previous title: “Combinatorial Growth with Physical Constraints: Evidence from Electronic Miniaturization”
Number 970
May 2021 Revised October 2022

JEL classification: O30, O40, E00

Authors: Pablo Azar

Over the past sixty years, semiconductor sizes have decreased by 50 percent every eighteen months, a trend known as Moore’s Law. Moore’s Law has increased productivity in virtually every industry, both by increasing the computational and storage power of electronic devices, and by allowing the incorporation of electronics into existing products such as vehicles and industrial machinery. In this paper, I examine the physical channel through which Moore’s Law affects GDP growth. A new model incorporates physical constraints on firms’ production functions and allows for new types of spillovers from the physical characteristics of products. I use the model, and a new data set of product weights, to estimate the effect of the electronic miniaturization channel on productivity growth. The results show that between 11.74 and 18.63 percent of productivity growth during 1960 to 2019 can be attributed to physical changes in the size of electronic components. This effect is highest during the 1990s and early 2000s.

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Author Disclosure Statement(s)
The author declares that he has no relevant or material financial interests that relate to the research described in this paper. Prior to circulation, this paper was reviewed in accordance with the Federal Reserve Bank of New York review policy, available at
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